REAL ESTATE NEWS

Tortuga Resorts has struck a $2 billion deal to acquire Hyatt Hotels Corp.'s recently purchased Playa real estate portfolio, which includes 15 overseas resorts.

Under the definitive agreement, Hyatt will keep $200 million in preferred equity across the portfolio, which is split between the Dominican Republic, Jamaica and Mexico. Plus, the hospitality giant could earn an extra $143 million if "certain operating thresholds are met," according to a statement posted by the company. For 13 of the 15 assets, Hyatt and Tortuga have reached 50-year management agreements. The other two properties will operate under separate contracts, with no other details provided.

The move to sell the portfolio comes just months after Hyatt announced its intention to acquire the Playa portfolio in February for $2.6 billion, which officially closed about a couple of weeks ago. The net purchase comes out to roughly $555 million for Hyatt regarding the Playa properties. Before taxes, depreciation, interest and amortization, the Chicago-based firm expects to generate stabilized adjusted earnings, ranging from $60 million to $65 million in 2027. This amount is inclusive of profit that comes from Hyatt's distribution channels, including Unlimited Vacation Club and ALG Vacations.

Additionally, Hyatt is mandated to use the funding from the sale to repay a draw term loan it took out that supported the partial purchase of Playa.

“The planned real estate sale to Tortuga transforms the acquisition of Playa Hotels & Resorts into a fully asset-light transaction and increases Hyatt’s fee-based earnings,” Mark Hoplamazian, president and CEO of Hyatt, said in a statement.

“Hyatt has secured long-term, durable management agreements and the planned real estate sale demonstrates Hyatt’s commitment to its asset-light business model and ability to deliver value to shareholders that is accretive in the first full year.”

While the sale is subject to closing conditions, it is expected to be completed before the end of the year. Goldman Sachs & Co. LLC and Simpson Thacher & Bartlett LLP financially and legally respectively advised Tortuga. Latham & Watkins LLP and Berkadia took care of legal and real estate matters for Hyatt.

Source: GlobeSt/ALM